All-Star Panel: Reaction to Rubio's plan for taxes

This is a rush transcript from "Special Report," April 15, 2015. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

SEN. MARCO RUBIO, R - FL: I don't think The Wall Street Journal or any conservative have any quarrel about what we've done on the pro-growth side of this debate. I think it all comes down to the child tax credit. And I would say two things about that. If we eliminated this additional child tax credit, the most you would get is, maybe, maybe two percent reduction in the top rate. I think our argument is the one that Senator Lee has made, and that it's not redistribution because this money doesn't belong to the government in the first place. I'm a huge proponent of everything President Reagan did. And I think he was a historic figure and, quite frankly, my favorite president certainly of the 20th century. I also think we need to recognize that the 21st century has some significant differences from the era in which he governed. Tax rates are different. Globalization is real. And we need to stay globally competitive.

(END VIDEO CLIP)

BRET BAIER, ANCHOR: Newly announced presidential candidate Marco Rubio putting out a tax plan today, says it can be workable, but alongside Senator Mike Lee laying out the points in this plan. Cut the top tax rate for corporations from 38 percent to 25 percent, eliminate taxes on capital gains, dividends, and inherited estates. Reduce tax brackets from seven to two, 35 percent and 15 percent for individuals and families, and a new tax credit of up to $2,500 per child. Wall Street Journal as mentioned at the beginning of that sound bite said this. "With this proposal, Senator Rubio makes himself the party's most visible ally of the new Republican idea that the Reagan tax- cutting agenda is a political dead end and that the party must now redistribute revenue directly to middle class families. It's not clear how candidate Rubio would hope to win a tax credit bidding war with Hillary Clinton, who would see him, raise on the size of the credit, and make it refundable to non-taxpayers. The Rubio tax credit looks like an obvious political gambit with no economic growth payoff." It's out there. It's tax day. We'll start there. Let's bring in our panel, Steve Hayes, senior writer for The Weekly Standard, Charles Lane, opinion writer for the Washington Post, and syndicated columnist Charles Krauthammer. Steve, oftentimes presidential campaigns, especially in the early stages, don't get specific. Marco Rubio is getting specific.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Yeah, he is very specific. This plan itself is very specific. And if you read his book, he put out a book, a policy book, he goes into great detail in the policy book as well.

I think in a sense I agree with both Marco Rubio and the Wall Street Journal. Rubio is right that it's not redistribution to have these child tax credits because they are, in fact, the people who have paid the taxes, it's their money in the first place.

But I agree with the journal that this could be a bolder plan. I think at a time-- a political time when you've seen Republicans coming off of the IRS scandals where, remember, what started the IRS scandal was Lois Lerner apologizing for bad behavior. It hasn't been covered very well in the mainstream media lately, but it was a scandal, it remains a scandal, and people are well aware of it.

I think you combine that with high tax rates right now, and Republicans should be going big and bold and moving towards a flatter tax, moving maybe towards a consumption tax. This is a good tax plan. If this were the tax plan in the country tomorrow, it would be good for economic growth, it would be good for a number of reasons. But I think as an aspirational plan it could have been bolder.

BAIER: Yeah, I mean, Chuck, when you talk to Republicans in different circles, the flat tax, the fair tax, something big, bold that changes that you can pay your taxes on a postcard, it's all things that they've talked about. Whether it's reality or not is a different story.

CHARLES LANE, OPINION WRITER, WASHINGTON POST: Yes. I basically agree with that point. I was going to put it slightly differently. There's no overarching theme to this tax plan. It's sort of a grab bag of various proposals.

And I guess the political logic of it runs something like this. He's getting rid of capital gains taxes and the estate tax and everything, which is music to the ears of Republicans and the Republican base. And then over here he's getting $2,500 bucks in a tax credit to John Q. Public per child, and I think that's the way he wants to play that. If he gets to a general election, he'll be able to say to the middle class people, here's my middle class piece, knowing that they don't begrudge the upper income people. It's sort of a -- the class warfare doesn't necessarily play.

I think the big problem with it to me is I haven't heard how he's going to pay for all of this. He is going to cut taxes a lot. There's some dynamic scoring going on, I guess, on his side. But he's also vulnerable on the deficit side of this.

BAIER: Yeah, and I think he said that's another piece of this entitlement reform that has to be talked about long term. I mean, Bowles- Simpson, Charles, what they did was they said if you want something back in you've got to take something off the table.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: But they don't have to run for the presidency. And I supported that kind of plan. I think in the end it's what we're going to have to have. And I think a president who is serious about tax reform will do exactly that, try to aim for a revenue neutral tax reform. You could always add on a bit of revenue in the end, but you want to aim for revenue neutrality, which was in the commission report which Obama never touched.

But he's proposing something different here. He's proposing tax cuts. And I think this argument with him and The Wall Street Journal over what is essentially two percent of the rate I think is slightly over- exaggerated. It's not going to make any difference in the real world if there's one or two percent lower rate.

And, I think what he's doing, obviously, is to try to win votes with the sweetener of the child tax credit. There's nothing particularly wrong with that. And it is true that a pudding has to have a theme, but a tax plan doesn't have to have a theme. The theme here is that you're lowering rates, particularly on the corporate side, you're lowering the tax on investment and return, capital gains, which is what everybody on the right has always said is the engine to drive growth. So you have very serious pro-growth elements in here and you've got a sweetener for a child tax credit. That that's, you know, a rejection of Reaganism I find slightly over the top.

BAIER: And you also have the sweetener of the support from Senator Mike Lee who is backed by the Tea Party and the conservative side of the party. Listen to President Obama today, on tax day and we'll get a quick reaction from the panel.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: If you listened to some of my political critics, they always want to paint me or the Democratic Party as this tax and spend and irresponsible. And let me say this. Since I came into office the federal deficit has come done by two- thirds. It hasn't gone up.

(END VIDEO CLIP)

BAIER: Charles?

KRAUTHAMMER: I'm sorry, but I didn't hear that and perhaps you could give me a break.

BAIER: Wow. We'll come back to you.

KRAUTHAMMER: Yes.

BAIER: Because I thought you were armed and ready. Did you hear it?

LANE: Yes, I heard it.

(LAUGHTER)

BAIER: Big mistake. OK.

LANE: The president was boasting about bringing the deficit down by two-thirds and I guess --

BAIER: And that he's a tax and spend liberal --

LANE: Contrary to the tax and spend critique.

I don't know. The deficit has come down by two-thirds. How much of that is him, how much is the Republicans fighting for sequestration we can discuss ad infinitum. The real problem is the deficit was so big in the first place, and that was mainly because of the recession. I know you may not agree with that, but when growth was restored that did a lot to bring the deficit back down again.

HAYES: But that ballooned because of the stimulus and the president has fought every effort to bring the deficit down. When it's convenient for him he says that Republicans, you know, these evil Republicans implemented the sequester and it's starving all of these program, these very necessary programs from the dollars that they need to perform successfully. And when he wants to boast about deficit reduction, he then takes credit for it. It's totally disingenuous. And if he's not a tax-and-spend liberal, then that word has no definition. Those words have no meaning.

BAIER: Aren't you sad that you didn't hear it now?

KRAUTHAMMER: I am, because I would have said what Charles says, but far more negatively and with passion. It's like a guy who robs a bank and says I left behind a few of the bags. What he did with the deficit is completely unprecedented -- a trillion and a half dollars a year. We've never come near to that. He did it four years in a row, the biggest run-up of the deficit in history. And of course it was reduced because it was entirely unsustainable. So that's really an empty boast. And still the level he's at now is historically high in pre-Obama days. And he talks about it as if he has eliminated the deficit.

BAIER: Next up, what is Russia up to lately?

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